The Entrepreneur Forum | Startups | Entrepreneurship | Starting a Business | Motivation | Success

About Pricing Strategy

Remove ads while supporting the Unscripted philosophy...become an INSIDER.

VicFountain

Bronze Contributor
I've Read UNSCRIPTED
Speedway Pass
Jun 22, 2018
159
205
152
20
How do you go about pricing your products or services?
In Microeconomics I've been taught the general supply/demand law and how pricing lower than your competitors increases the demand for your products.
But I guess this is only true for commodities and not differentiable products & services.

Dan Kennedy in his "Pricing Strategy" book explains how pricing low might 1. Decrease your potential profits and, 2. Create a "low-quality" image of your brand.
What do you think about all this?

I'm deep into cognitive dissonance right now.
 

Don't like ads? Remove them while supporting the forum. Subscribe.

  • Like
Reactions: Kid

Johnny boy

Platinum Contributor
Speedway Pass
May 9, 2017
671
3,202
757
23
Washington State
He’s right.

Pricing is based on a number of factors though. I run a lawn care company. We differentiate ourselves with a good presentation (white guy selling a lawn care contract wearing a polo shirt and showing up in a nice truck). We can price higher than everyone else this way.

Then, we present our prices monthly for a year long contract with services in the growing season only. This means we say “It will be $120 for 12 months with tax” and you’re paying $72 a visit when we are here for 20 minutes

Technically we are making almost $200 an hour but you would never sign up with us if we said “we charge $200 an hour”. See my point?

As for actually picking a certain price to present to the customer, it’s a mix of 1. The Max I think they are willing to pay 2. The minimum I’m willing to do it for to be decently profitable and 3. Avoiding regret.

If I think they’ll pay possibly up to $200 a month, and the minimum I’d consider doing it for is $120 a month, and we aren’t absolutely starving for new business but can easily take on a new customer, then a decent price might be right around $160 a month. You’re making some money. You’re not theoretically leaving a ton on the table, and you’re not going to regret your pricing in the case that they go with someone else, or they sign up and say “wow that’s cheap”. It’s a Goldilocks thing.

All of these heuristics can be traced back to economic principles like price elasticity, different factors moving the demand and supply curves in and out. None of it is all that mathematical though.

I would listen to Dan. He’s from the world of business, not the classroom.
 

Create an account or login to comment

You must be a member in order to leave a comment

Create account

Create an account on our community. It's easy!

Log in

Already have an account? Log in here.

Sponsored Offers

  • Sticky
MARKETPLACE Fox's Web Design Guide: Earn $100K this year (Yes, 2020!) and Go Fastlane
Hi, just wanted to make sure I get it - with Fox Sales Legends there is coaching, weekly calls...
  • Sticky
FEATURED! Introducing... WEALTH EXPO$ED, A Short Story By MJ DeMarco
Amazing book! Actually I bought it, before I joined the forum and it motivated me to join...
  • Sticky
MARKETPLACE How To Create A 100K-1M+ Sales Funnel
@LynX You know, this is a "Marketplace" Thread. Completely appropriate to offer goods and...
  • Sticky
MARKETPLACE You Are One Call Away From Living Your Dream Life - LightHouse’s Accountability Program ⚡
Dropping a quick note in here to say... if you are on TFL, you are part of an elite group of...
  • Sticky
MARKETPLACE KAK’s “Kill Bigger” Incubation Program- With DAILY personal attention.
I joined @Kak's business incubator in the first week of May. During our daily chats we uncovered...
  • Sticky
MARKETPLACE Lex DeVille's - Advanced Freelance Udemy Courses!
This is your May reminder that you can do this. I'll keep it short. These are the May promos...
  • Sticky
MARKETPLACE Grow Your Business With a Book (An Unorthodox Marketing Strategy That Built One of the Largest...
Thanks! This is a cool idea, actually. I would like to use your experience as I heard that these...


Visit A Forum Sponsor
sponsor

Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Monthly conference calls with doers
Ideas needing execution, more!

Join Fastlane Insiders.

Top Bottom
AdBlock Detected - Please Disable

Yes, ads can be annoying. But please...

...to support the Unscripted/Fastlane mission (and to respect the immense amount of time needed to manage this forum) please DISABLE your ad-block. Thank you.

I've Disabled AdBlock